Pulling the Trigger Hurts: How Family CEOs Use Sensemaking to Overcome Hesitancy to Dismiss Managers

Dismissing Managers in Value-Based Organizations

Over the past decades, the topic of managerial dismissals has attracted broad interest (Andrus et al., 2019; Bilgili et al., 2017; Boeker, 1992; Callahan, 2024). Respective research has paid particular attention to why managers are being dismissed and what the implications of such dismissals are. Prevalent reasons for managerial dismissals can be summarized as existing or perceived mismatches with the organization and its needs. Managers might be dismissed due to non-compliant behavior, such as financial misconduct (Hersel, Gangloff, & Shropshire, 2023) or poor individual performance (Boeker, 1992). However, organizational and individual contingencies also facilitate dismissals; research shows that CEO successions often result in managerial dismissals (Andrus et al., 2019) and that dismissals are more common in times of turnaround (Barker, Patterson, & Mueller, 2001). Further, research has drawn out a broad range of implications that managerial dismissals entail. Dismissals might improve firm performance (Tsao, Le Breton-Miller, Miller, & Chen, 2021) and facilitate strategic change (Hilger et al., 2013). However, dismissals might also carry negative implications, such as having to pay severance packages (Callahan, 2024), an increase in uncertainty among remaining employees and managers (Andrus et al., 2019; Laulié & Morgeson, 2021), or a power shift among top managers (Georgakakis & Buyl, 2020). Further, dismissals often create turbulence in organizations and might lead to collective voluntary turnover when, for instance, close friends leave the firm (Krackhardt & Porter, 1985) or when groups spread negative perceptions after dismissals (Bartunek, Huang, & Walsh, 2008). Thus, there is a robust body of knowledge surrounding the antecedents and consequences of managerial dismissals.

However, there are surprisingly few insights into how CEOs arrive at managerial dismissal decisions and how the decision-making process of such dismissals unfolds. In the past, only a few articles have addressed the process of dismissals (Fredrickson, Hambrick, & Baumrin, 1988; Haleblian & Rajagopalan, 2006), and these articles tend to build on a rationalistic paradigm that focuses on cost–benefit analyses, casting CEOs as “utility maximizers who are driven primarily by concerns about productivity and profit” (Rivera, 2020: 216). While such a perspective can explain some instances of managerial dismissals (e.g., in performance-focused “up-or-out” organizations, such as management consultancy firms), it leaves little space for considering the role of the “soft side” of dismissal decisions and their meaning, particularly from the perspective of those who must take them. Keum and Meier (2024) find evidence in a large-scale field study that dismissal decisions carry high moral costs for CEOs, and are hence avoided by decision-makers with prosocial preferences. Further, extant research pays little attention to both social dynamics within the organization (Andrus et al., 2019) as well as the role of close personal ties and friendships among managers (Ingram & Zou, 2008), which might further complicate dismissal considerations. Last, an overly rationalistic perspective often does not take into account the role of non-financial considerations and cultural values that inform many business decisions (Gehman et al., 2013; Gómez-Mejía et al., 2011).

While dismissing managers is a task that any CEO likely encounters during their tenure (Finkelstein, Hambrick, & Cannella, 2009), it is a significant challenge for CEOs who have just moved into this position and thus face a “sharp increase in task-oriented responsibilities [and] expectations” (Andrus et al., 2025: 2). New CEOs commonly aim to bring change into the firm and its culture (Andrus et al., 2025; Ma, Seidl, & Guérard, 2015), which regularly entails evaluating the existing management team and making adjustments to it (Ma & Seidl, 2018). Thus, they are often seen as the “architects” of the management team (Georgakakis & Buyl, 2020). However, as extant research highlights, initial personnel decisions send signals to the organization (Laulié & Morgeson, 2021; Wang et al., 2023). Such considerations around the meanings of dismissals for the organization and its stakeholders become all the more important in value-based organizations.

We understand value-based organizations as those building on a deeply embedded framework of non-financial goals (Astrachan et al., 2020; Dieleman & Koning, 2020; Gehman et al., 2013) that result in a strong relational foundation and in which career stability and strong identification with the organization lead to an inherent embeddedness of actors in the organization. In such organizations, CEOs may consider dismissals as “dirty work” (Carollo, Guerci, Della Torre, & Previtali, 2024) or, due to organizational culture and values, might be reluctant to dismiss managers even when under pressure (Block, 2010; Lefebvre, 2024). Thus, they might be particularly aware of the signals dismissals might send to the organization (Laulié & Morgeson, 2021; Wang et al., 2023). Especially organizations like social ventures, cooperatives, and hospitals—but also NGOs, universities, or sports clubs—often build upon a powerful and deeply rooted set of values (Dowling, Edwards, & Washington, 2014; Gehman et al., 2013). These characteristics may stem, for instance, from a social mission (Ashforth & Reingen, 2014; Bacq et al., 2019) or a specific professional logic (Denis et al., 2000; Konlechner, Latzke, Güttel, & Höfferer, 2019), and are commonly passed on to new CEOs. Such organizations typically eschew purely transactional exchanges, instead valuing a strong culture and long-term relations with their people (De Massis, Audretsch, Uhlaner, & Kammerlander, 2018). Thus, while all types of organizations might perceive managerial dismissals as “disturbing idiosyncratic events” (Simón, Avgerinos, & Revilla, 2023: 2672), this disturbance is likely particularly strong in value-based organizations that, as a result, desire to refrain from dismissals (Keum & Meier, 2024).

One form of organization that can be seen as an extreme case of value-based organizations is family firms, which are the most prevalent type of firm around the globe (La Porta, Lopez-De-Silanes, & Shleifer, 1999). Owned and often also managed by one or a few families (Chua, Chrisman, & Sharma, 1999), the overlap of business and family shapes family firm behavior because their CEOs must balance partially conflicting demands and deal with the resulting tensions (Minichilli et al., 2014). Consequently, non-financial considerations, such as preserving family reputation, long-term control over the firm, or good employee relations (Neckebrouck et al., 2018; Palm, Kraft, & Kammerlander, 2024), play an important role in family firms and often take priority over financial, business-related concerns (Gómez-Mejía et al., 2007; Palm et al., 2024). Such non-financial considerations influence the employee-organization relationship (Coyle-Shapiro & Shore, 2007; Gottschalck, Guenther, & Kellermanns, 2020; Neckebrouck et al., 2018), leading, for instance, to distinct employment practices that can range from deeper care for employees to nepotism (Gómez-Mejía et al., 2011; Gómez-Mejía, Núñez-Nickel, & Gutierrez, 2001). The care for employees often extends to non-family managers (Gómez-Mejía et al., 2001) and thus might make new family CEOs particularly reluctant to dismiss organizational members (Block, 2010; Keum & Meier, 2024; Lefebvre, 2024). Providing empirical evidence for such claims, Belling et al. (2022) show that family firms dismiss fewer top managers, irrespective of the business situation. Thus, while we know that dismissal decisions are always challenging (Hiekkataipale & Lämsä, 2017; Keum & Meier, 2024; Stybel, Cooper, & Peabody, 1982), they might be particularly hard for new CEOs in value-based organizations, such as family firms (Keum & Meier, 2024; Lefebvre, 2024) and might trigger processes of sensemaking in how to proceed.

Managerial Dismissal Decisions as Sensemaking

At its core, sensemaking refers to a process of social construction in which actors create meaning regarding ambiguous, surprising, or confusing situations, which, ultimately, enables them to take action, such as taking important organizational decisions (Maitlis, 2005; Maitlis & Christianson, 2014; Weick, 1995). Commonly, sensemaking is seen as episodic; in periods when the regular flow of activity is interrupted either through unforeseen events (e.g., the explosion of the Columbia Shuttle (Dunbar & Garud, 2009) or foreseeable events (e.g., strategic change (Balogun, Bartunek, & Do, 2015; Gioia & Chittipeddi, 1991), actors need to “make sense of the disrupted activity in order to restore it” (Sandberg & Tsoukas, 2015: 12). To create such sense, individuals extract and interpret cues from their social environment to create ordered accounts of the world that enable them to take further activity (Weiser, 2021). As such, while rooted in individuals’ minds, sensemaking represents an inherently social activity that draws on interactions and implicitly presumes an (imagined) audience to whom actors justify themselves. As Weick (1995: 40) highlights: “Sensemaking is never solitary because what a person does internally is contingent on others. Even monologues and one-way communications presume an audience.”

Going beyond the rationalistic cost–benefit analysis inherent in extant research on managerial dismissals, we conceptualize deliberations about managerial dismissal decisions as a case of sensemaking that enables new CEOs to take action. While sensemaking has previously been utilized to understand the perspective of those leaving, being dismissed, or experiencing dismissals of co-workers (Bartunek et al., 2008; Rothausen, Henderson, Arnold, & Malshe, 2017), it also provides a fitting frame to understand how new CEOs cope with such situations. First, managerial dismissal decisions are inherently episodic. The process begins when new CEOs interpret cues to determine whether the person remains a good fit for the organization, and it concludes with the decision to dismiss or retain the manager. Similar to the study on the Bhopal disaster in which employees encountered cues such as unusual smells that preceded the explosion of the plant (Weick, 2010), managerial dismissal decisions likely start with similar discrepant cues that new CEOs encounter. While individual cues might be either overlooked or ignored, as in the case of lapses of medical personnel (Blatt, Christianson, Sutcliffe, & Rosenthal, 2006), an “accumulation of strange cues,” (Maitlis & Christianson, 2014: 72), like co-workers’ complaints or persisting low performance, likely result in a process of sensemaking for new CEOs.

Second, particularly in value-based organizations, these episodes of considering dismissals are likely ripe with tensions, uncertainty, and doubt. Particularly due to strong values common in many family firms, dismissals have been historically seen as “taboo” (Keum & Meier, 2024) or might be seen as unthinkable by organizational actors. For instance, Salvato and colleagues (2010) show how, despite clear performance indications and market deterioration, members of an owner family went through prolonged sensemaking over several years to let go of their heritage business due to ingrained values and a feeling of personal responsibility. Thus, episodes of managerial dismissal considerations might require deep sensemaking to answer “what’s the story?” and “now what?” (Weick, Sutcliffe, & Obstfeld, 2005).

Third, managerial dismissals are inherently social processes in which new CEOs must not only consider the individual manager and their performance, but also the broader implications of such decisions on close co-workers (Krackhardt & Porter, 1985) and the organization and its values (Keum & Meier, 2024). Emphasizing the role of the broader organization, Diaz-Moriana, Clinton, and Kammerlander (2024) show how family CEOs align tensions between economic and non-economic goals through sensemaking, and how this process allows them to take strategic change-related decisions and communicate them to stakeholders. Taken together, sensemaking thus provides a compelling perspective to study how new CEOs decide on managerial dismissals.

Based on an inductive analysis of our data, we focus on two types of sensemaking that have already been mentioned by prior research: dyadic sensemaking and prospective sensemaking (Gioia & Mehra, 1996; Sandberg & Tsoukas, 2015; Wrzesniewski, Dutton, & Debebe, 2003). Dyadic sensemaking processes (Crawford, Thompson, & Ashforth, 2019) cast light on how individuals see themselves vis-à-vis relevant others (and vice versa), such as close friends making sense of each other leaving the organization (Bartunek et al., 2008; Krackhardt & Porter, 1985). Research on workplace behavior reveals that individuals engaging in dyadic sensemaking are attentive to interpersonal cues, defined as “noticing some kind of action or behavior of another person” (Wrzesniewski et al., 2003: 103). Prospective sensemaking refers to “an attempt to make sense for the future . . . an attempt to structure the future by imagining some desirable (albeit ill-defined) state” (Gioia & Mehra, 1996: 1229). It induces thinking in scenarios, building a sense of how situations might unfold (Sandberg & Tsoukas, 2015). For instance, Konlechner and colleagues (2019) apply prospective sensemaking to investigate how staff members in a hospital setting develop early and sticky expectations in a change context. Such prospective sensemaking provides an anchor for later re-evaluation and, hence, affects the change processes over time. Drawing on both perspectives, we investigate how new CEOs make sense of potential managerial dismissals.

Research Context

The research context is family firms with new family CEOs, who were all members of the owning family. Each CEO conducted, or seriously considered, dismissals of one or more long-term (middle- or top-level) managers who were not members of the owning family. In this study, the term “dismissal” refers to the involuntary discontinuation of a manager’s employment, irrespective of the actual legal technicalities of the separation (Batt & Colvin, 2011; Haleblian & Rajagopalan, 2006). We focus on cases of (potential) dismissals triggered by new CEOs recognizing an existing or anticipated mismatch between a manager and the organization. That is, we examine situations in which new CEOs determine that a manager is, or will not be (any longer), a good fit for the organization, either concerning culture (i.e., inappropriate behavior or leadership style) or work performance (i.e., poor results or inadequate skills; Berns, Gupta, Schnatterly, & Steele, 2021; Simón et al., 2023). We do not include cases in which dismissal considerations are based on reasons like the CEO’s antipathy, nor do we include cases where multiple people are dismissed for a common reason (e.g., cost-cutting) as part of downsizing (Batt & Colvin, 2011).

What is more, we concentrate on targeted dismissals of managers who have worked for the respective family businesses for an extended period (the average tenure of those managers dismissed in our sample is 15 years). Even if the new CEOs might not have a personal relationship with the managers when entering their role, they are knowledgeable about the work history of the managers, their embeddedness in the organization, as well as potential ties to the predecessor or other organizational members, which complicates the dismissal decisions.

Sample

Our sample encompasses six family firms led by new family CEOs (see Table 1). The case firms had to fulfill three sampling criteria (Eisenhardt & Graebner, 2007). First, they had to be owned and managed by a family (Chrisman et al., 2005; Chua et al., 1999), which provides a rich context in which values play a key role in decision-making. Second, all firms had recently undergone an intra-family succession, meaning that the management of the firm passed from one generation to the next within the family (Daspit et al., 2016). As noted above, this particular point in the life cycle of a family firm is interesting as new CEOs often evaluate and make adjustments to their team of managers (Andrus et al., 2025; Georgakakis & Buyl, 2020). The six cases were similar in that they all followed an intrafamily succession with the parents of the successors handing over ownership and management responsibilities of a well-running firm to their offspring (for more details, see Table 2). Moreover, all new CEOs had high levels of discretion due to their family membership and concentrated ownership, that is, they had the de facto power to dismiss managers. The case firms differed, however, concerning the CEOs’ previous work experience within and outside the family firm (see Table 2). Last, all firms were headquartered in Germany to limit variation on dimensions such as labor law and cultural norms regulating dismissals (Eisenhardt & Graebner, 2007). Germany is well suited for such a study for three reasons: (a) long-term, loyal employer-employee relationships are particularly highly valued in German work culture and enshrined in the (West) German concept of the Social Market Economy (De Massis et al., 2018); (b) labor laws make it hard to dismiss individual employees, hence rendering targeted dismissals an “unusual” situation; and (c) dismissals are often viewed as immoral by society at large, thus enhancing ambiguity and equivocality of the dismissal (Keum & Meier, 2024).

OPEN IN VIEWER

Table 1

Overview of Cases and Data Sources

Case	Firm Information		Generation	Interviews and Data		Min	Further Interviews	#	Min	Sum #	Sum min	Further Data
	Industry	Head Count		CEO Interviews(Regular & Podcast)	#
ConstructCo	Manufacturing	50-100	2nd	CEO, shareholder Podcasts	3 6	190 353	Senior manager 1, senior manager 2, senior manager 3, employee	4	237	7	427	Website (9), press article (3)
DigitalCo	Services	150-250	3rd	Co-CEO #1; Co-CEO #2, both are shareholders Podcasts	5 6	215 268	Division head 1, division head 2, division head 3, team lead	4	250	9	465	Website (7), press article (6), company comms (4), internal newsletter (4)
MachineCo	Manufacturing	150-250	3rd	CEO, shareholder Podcasts	3 7	197 305	Predecessor, executive manager, department head 1, department head 2, employee 1, employee 2	6	327	9	524	Website (6), press article (1), company comms (1)
StoreCo	Retail	150-250	4th	CEO, shareholder Podcasts	3 14	181 508	Predecessor, site manager, department head, senior manager 1, senior manager 2, employee 1, employee 2	7	315	10	496	Website (3), press article (3), social media (4)
SupplyCo	Retail	50-100	3rd	CEO Podcasts	3 3	190 83	Division head 1, division head 2, department head, manager, employee	5	249	8	439	Website (6), press article (1)
ToolCo	Manufacturing	< 50	2nd	CEO, shareholder Podcasts	3 13	165 503	Department head 1, department head 2, senior manager 1, employee 1, employee 2	5	231	8	396	Website (6), press article (3), social media (3)
Not Case Specific	-	-	-	-	-	-	Family CEOs (15), family firm consultants (2)	17	1,140	17	1,140	Books, articles, and blogs on family firms, succession, organizational change, HRM
Total				InterviewsPodcasts	2049	1,1382,020		48	2,749	6849	3,886~ 65hr2,020 ~34hr	~ 70+ documents

OPEN IN VIEWER

Table 2

Variance Across Cases

Case	Experience Before CEO Succession	CEO Succession	Specific Succession Conditions	Organizational Values	Observed Mechanisms	Observed Outcome
Construct Co	• grew up with FF• directly joined after vocational training• worked for ~ 10 years in FF	• FF: well-performing• predecessor: father• age: ~35	• good relationship with parents, although different personalities	• employee empowerment & protection• continuous improvement	• inflating• separating• reinterpreting• redefining• rationalizing	• reasoned dismissals
DigitalCo	• grew up with FF• Co-CEO #1: studied mgmt, worked 12 years in FF• Co-CEO# 2: studied law, joined FF directly after PhD	• FF: well-performing• predecessor: father• age: ~35, ~30 (took over at the same time)	• very good relationship with parents, although very different personalities• strong support from parents• two brothers very harmonious with little conflict and lots of discussion & agreement	• respect• equality	• inflating• separating• redefining• rationalizing	• reasoned dismissals
Machine Co	• grew up with FF• studied IT in mgmt• worked 1 year in consulting• worked for 4 years in FF	• FF: well-performing• predecessor: father• age: ~30	• good relationship with parents• strong support from his father	• trust• humanity• employee empowerment & development	• inflating• reinterpreting• redefining• rationalizing	• reasoned dismissals
StoreCo	• grew up with FF• studied mgmt• worked 5 years as start-up founder	• FF: well-performing• predecessor: father• age: ~30	• good relationship with parents, although very different personalities	• warmth• togetherness	• inflating• separating• reinterpreting• redefining• rationalizing	• reasoned dismissals
SupplyCo	• grew up with FF• studied mgmt• worked 5 years in consulting	• FF: well-performing• predecessor: father• age: ~30	• Turmoil: unexpected takeover after father’s sudden death• very good relationship with parents; mother strongly supports her	• loyalty• employee development• responsibility	• redefining• rationalizing	• rejected dismissals (continued focus on individuals)
ToolCo	• grew up with FF• studied mgmt• worked 1.5 years in FF• worked several years in start-up	• FF: well-performing• predecessor: father & mother• age: ~35	• Turmoil: originally left the firm due to different ideas about her future• generally good relationship with parents	• participation of employees• employee development	• redefining	• rejected dismissals (continued focus on individuals)

Note. FF = family firm; mgmt = management.

Based on our initial desk research, we contacted, by email, 54 new family CEOs who we thought might meet our sampling criteria. This resulted in brief calls with 23 new CEOs, in which we confirmed or disconfirmed the sample fit—in particular, their experience with considering dismissals of well-embedded managers. We agreed with seven new CEOs from six family firms to proceed with the research, including multiple rounds of data collection.

Data Collection

To gather insights into the new CEOs’ sensemaking, we collected data from the six family firms over more than 30 months. Our primary source of data is in-depth, semi-structured interviews and podcasts. First, we interviewed the new CEOs (20 interviews), inquiring about their dismissal decisions, and searched for podcasts with these CEOs (49 podcasts) in which they talked about their organization, their experiences as new CEOs, their values, and how they treated employees. In addition to such CEO-centric data, we collected interviews with other organizational members (31 interviews). ² These interviews focused on the family firm (e.g., values) in general, and dismissals in particular. The non-CEO interviews served three purposes. First, they provided insights into sensemaking as a social process (Weick, 1995), helping us understand whether, for instance, the values outlined by the new CEOs were actually lived in the companies. Second, the interviewees recounted dismissals (including reasons for dismissals) and shared memories of (actual) organizational reactions to dismissals, providing insights into how such dismissals were perceived over time. Such insights allowed us to understand better and contextualize the cues sent by organizational members that had informed the new CEO’s sensemaking. Third, the non-CEO interviews helped us triangulate our emerging theory about managerial dismissals by adding to, and challenging, what was shared with us by the new CEOs.

Interviews lasted on average 57 minutes (CEOs) and 52 minutes (non-CEOs), respectively, and contained open-ended questions that encouraged interviewees to speak openly and recall specific situations, feelings, and thoughts. Individuals typically recall such particularities more precisely than broad memories, hence reducing post-hoc rationalization (McDonald & Eisenhardt, 2020). We used several commonly applied practices, such as granting anonymity and building trust, to get truthful accounts on sensitive topics (Vuori & Huy, 2022). Further, we recorded and transcribed the interviews verbatim. We conducted the interviews in four phases. The first round of interviews with new CEOs took place in 2021. In these interviews, we focused on instances where there was a perceived mismatch between managers and the organization, and we examined how the new CEOs thought about it. In the second round, which took place in 2022, we conducted 31 interviews with various organizational members of the six case firms in order to capture the social nature of the sensemaking process. We took care to select interviewees from different hierarchical levels (i.e., managers, non-managers, predecessors), different backgrounds, and with different levels of tenure (see Table 1), applying a “snowballing” technique based on referrals from the new CEO or other organizational members. This diversity of perspectives reduces bias that would come from interviewing only one individual, that is, the new CEO, or various like-minded individuals (Vuori & Huy, 2022; Yin, 1994). We chose interviewees who had in-depth knowledge of the (potential) dismissals and were intimately involved with either the dismissed manager or the new CEO. We also included employees who observed the dismissals from a relatively “distant” perspective and provided cues to the new CEOs on how the organization as a whole would react to the dismissals.

In the third round, following initial data analysis, we conducted follow-up interviews with the new CEOs in late 2022 to ask further in-depth questions, such as how they changed their thoughts about potential dismissals and the organization’s reaction in the process, and what finally enabled the dismissal decision. We focused on the specific dismissal examples that we had learned about in the previous interviews and for which we had obtained additional information from interviews with other organizational members. A fourth and last round of interviews with the new CEOs (April to June 2025) allowed us to dig deeper into the value-based nature of dismissals—a topic that emerged as relevant throughout the analysis process. Moreover, in this round, we engaged in member checks (Crosina, 2024) where we shared and discussed our initial findings.

To complement our data and deepen our understanding, we collected additional information on the firms and their new CEOs, including website information, press releases, newspaper articles, and other material like press interviews. This information gave us a better understanding of instances of turnover in management and contextual factors, provided information on company values, and allowed us to lead informed interviews and triangulate our findings (McDonald & Eisenhardt, 2020; Smith, Rondi, De Massis, & Nordqvist, 2024). Last, we conducted interviews with additional case-external informants (N = 17; 67 min average interview length), focusing specifically on new family CEOs from other, comparable, firms (which did not provide us sufficient access to further organizational members to count as full cases) and family firm consultants. They helped us scrutinize our emerging theory from a knowledgeable third-party perspective, particularly in terms of initial hesitancy and the use of various mechanisms.

We concluded collecting (and analyzing) data at the point of theoretical saturation, understood as a state in which we had “reached a confident grasp on the phenomenon” (Howard-Grenville, Nelson, Vough, & Zilber, 2021: 1319). In other words, we stopped when the “concepts were sufficiently well developed and we believed we had achieved considerable depth in our theorizing through the data we had collected” (Komba, Shepherd, & Wincent, 2025: 3109). At this stage, we felt that adding more data would not yield any further insights as new information started to confirm our initial model, without yielding any novel, relevant codes (Glaser & Strauss, 1967). Moreover, the additional interviews with 17 further CEOs, as well as the member checks, conducted in the third round of new CEO interviews, contributed to our confidence in having reached theoretical saturation as they confirmed the relevance and comprehensiveness of our concepts and model (Crosina, 2024; Malhotra et al., 2021).

Data Analysis

In our analysis, we integrated an inductive approach that allowed us to examine the depth and richness of our data (Corbin & Strauss, 2008; Yin, 2014) with a multi-case design that enabled us to recognize emergent themes within each case and compare patterns across cases (Eisenhardt, 1989; Smith et al., 2024). Our interpretative stance focused on unpacking how the new CEOs arrived at the decision to dismiss (or retain) someone. Although the analysis was iterative, and some steps occurred in parallel, we delineate three main steps for better clarity (Pratt, Kaplan, & Whittington, 2020; Smith et al., 2024). After each step, and partly within the analysis steps, we discussed the (preliminary) results regarding patterns as well as similarities and dissimilarities across cases among the authors.

First, we created case descriptions for each of the six cases based on the supplementary data, the interviews, and the podcasts. These descriptions (30-35 single-spaced pages each) built a chronological narrative of the case firm, focusing on how the discussed dismissals evolved in each case firm (Eisenhardt & Graebner, 2007). We refined these case descriptions with every new piece of information (Strike & Rerup, 2016). Through writing and discussing these descriptions, we became increasingly familiar with the cases and could already identify initial patterns (Smith et al., 2024). We realized, for instance, that every new CEO perceived the dismissal decisions under investigation as difficult due to personal concerns and the feeling that such decisions were going against family firm values. Moreover, while we observed that all new CEOs initially concluded that they would not engage in a dismissal (unless managers “stole the silverware,”—a rapid dismissal decision that was only peripheral to our study), the new CEOs of four firms decided on dismissals after many months of contemplation (an outcome we later labeled as “reasoned dismissals”), while two new CEOs, despite such long deliberation, decided against dismissals (“rejected dismissals”). This variation in outcomes became central for our cross-case comparison in subsequent steps and guided our search for shared and divergent sensemaking processes.

Second, once we felt sufficiently familiar with our cases, we started to code the data using MaxQDA software. We began with open coding, which means we coded the texts for all elements that seemed relevant to understanding how new CEOs thought about potential dismissals (Miles, Huberman, & Saldaña, 2014). In this initial coding step, we coded, for instance, reasons why new CEOs considered dismissals, perceived constraints, justifications of dismissals, and outcomes. The temporal sequences identified in our case narratives, combined with the initial codes, revealed the prolonged and complex deliberation processes that all new CEOs underwent. This prompted us to engage with the literature on sensemaking to identify concepts that could help explain these patterns (Miles et al., 2014). We further realized that many of the arguments mentioned by the new CEOs related to work or personal relationships between the new CEO and manager (e.g., “dismissing friends from school”), which we classified as “dyadic sensemaking” in line with extant sensemaking literature (Wrzesniewski et al., 2003). We also came across several codes that indicated how new CEOs made sense of how the organization might react to dismissals (e.g., “fear of creating upheaval”), which we classified as "prospective sensemaking” (Sandberg & Tsoukas, 2015; Stigliani & Ravasi, 2012). In this step, our coding was broad, comprising a relatively large number of initial codes that also mirrored the variety observed in our sample.

Third, and partly in parallel to the second step, we aimed to theoretically interpret our data and started to more systematically compare the narratives and initial codes across cases (Eisenhardt, 1989). We started to visualize the sensemaking process of dismissal decisions (using a physical flipchart) for each case, and we also began to categorize and label our codes. Most importantly, our coding indicated five relevant mechanisms through which new CEOs revised their initial hesitancy, each of which could be linked to the above-introduced two forms of sensemaking; for instance, through separating, new CEOs split their personal concerns from their role (dyadic sensemaking), while through redefining, new CEOs shift their sensemaking of managers’ responsibility and hence expected reactions to dismissals (prospective sensemaking). Contrasting the sensemaking processes and initial codes from the six cases also allowed us to map both similarities and differences (Corbin & Strauss, 2008) across cases. For instance, when we systematically compared our codes, we realized that not all new CEOs applied all mechanisms to revise their sensemaking, leading to different outcomes.

In this third and last analysis step, we continuously refined our codes and also discarded several initially developed codes as non-relevant. For instance, when comparing the cases, we realized that it was irrelevant whether the trigger of a dismissal was related to individual performance or cultural fit. To challenge our emergent theorizing, we shared drafts with other researchers to receive feedback about our initial findings (e.g., in research seminars). These discussions supported us in assessing the relevance of specific codes and refining the classification and labeling of codes. As a result of our data-driven and theory-informed iterations, we were able to trace the differences regarding rejected versus reasoned dismissals (see Step 1) back to the mechanisms used in the revised sensemaking process. Here, our cross-case analysis helped us understand how “rejected dismissals” originated in only partially revised sensemaking.

The outcome of this third step of data analysis was two-fold: First, we narrowed the large number of initial codes identified in Step 2 to the core constructs that were empirically grounded and theoretically meaningful in addressing our research question. This reduction was informed by relevance and conceptual clarity. Table 3 summarizes the key constructs, defines them, and provides illustrative quotes (Pratt et al., 2020; Smith et al., 2024). Second, we synthesized the patterns observed across the cases into a conceptual model that captures new CEOs’ dismissal-related sensemaking (see Figure 1). This model was based on the abstraction of the visual maps created in Step 2 and our knowledge gained in Step 3. To finalize our model, we iterated again between data and theory to further sharpen our coding and model (Miles et al., 2014; Smith et al., 2024). This final iteration also ensured that the model accounted for the observed variation in outcomes—specifically, by mapping how different use of mechanisms led to either reasoned or rejected dismissals. In sum, the iterative nature of our data analysis ensure our findings have rigor and are well supported by evidence (Miles et al., 2014; Pratt et al., 2020). We elaborate on these findings in the following sections.

OPEN IN VIEWER

Table 3

Additional Empirical Evidence for Constructs and Mechanisms

Core Construct	Definition	Illustrative Data
Perceived Mismatch of Manager and Firm	Perceiving mismatches on cultural and performance levels with the organization and its needs	But the human fit was just not there. We don’t only assess an employee based on their skills and the cost of their job. If it’s not a human fit, it’s a potentially disastrous situation. Because it can divide a team, it can cause unrest. (ConstructCo, Employee 1)I thought the situation was a real shame because he was a good fit as a person. Unfortunately, he had some great ideas, but he didn’t implement them and didn’t involve his team. So, unfortunately, it wasn’t enough. (MachineCo, CEO, Interview 2)I completely agree with my brother on that: There has to be a professional fit, and there has to be a human fit. The person must fit into the team; they have to fit into our company, into our organization. (DigitalCo, co-CEO #1, Interview 1)We always look at these two levels. First, you have to say: Okay, you have somebody who has the professional skills to be in this role. Check. But we also want to work with the person. (DigitalCo, co-CEO #2, Interview 1)
CEO’s Dyadic Sensemaking: Hesitancy Based on Personal Concerns	Encountering initial hesitancy to dismiss managers based on personal concerns	And, of course, I might give someone who is still very close to my heart more chances and try to develop them more, give them more pointers, and help them more. (DigitalCo, co-CEO #1, Interview 1)Naturally, it’s a little harder with someone you’ve laughed a lot with and had three beers with than it is with someone you haven’t. (StoreCo, CEO, Interview 2)Parting ways with people is one of the most emotional topics of all. Sometimes [the managers under scrutiny] are really nice people and not bad people at all. (ConstructCo, CEO, Interview 3)[Being under scrutiny for dismissal is] a shame in a way, because I also feel sorry for [the manager] personally, because it’s hard when you work in an organization where you realize that you’re not really valued for what you do and the other people know that too, (SupplyCo, CEO, Interview 3)
CEO’s Prospective Sensemaking: Hesitancy Based on Organizational Values	Encountering initial hesitancy to dismiss managers based on concern related to organizational values	It is not a nice decision to make. But certainly, the effect [the dismissal] has on the company makes it more difficult. (MachineCo, Senior Manager 1)I always told my father clearly: We have to take him out. My father didn’t want that at all. (StoreCo, CEO, Interview 2)I was actually often torn, because obviously I was thinking: Oh, in the past that was almost taboo. . . . It was always one of those things that I felt I had to avoid somehow. (MachineCo, CEO, Interview 2)And of course, I always feel, especially in family-owned companies, that the flag is always flying high: you [i.e., the employees] are not a number, and it’s not like in big corporations. And so on. And then you also have the feeling that this argument basically rules out dismissal. (StoreCo, CEO, Interview 2)[It feels like] I’m in a small room with a few walls that are somehow made of concrete, and I tried to circumvent them. (ToolCo, CEO, Interview 2)
Mechanisms for Revising the Sensemaking
Inflating	Overstating what is at stake when reflecting on the dismissal decision	And then it’s my job not to look at the individual person who perhaps has children at home. Instead, I must consider the entire system. The other employee also has two children at home, works overtime all the time, and, if worse comes to worst, gets sick because he has so much more work to do [due to the ill-performing colleague]. (StoreCo, CEO, Interview 2)And we decided for us, my brother and I, we don’t have much time. . . . For me, this [sense of urgency] is an argument to justify to myself why we execute the dismissal. . . . For us, it is usually a decisive argument. (DigitalCo, co-CEO #2, Interview 1)It’s really time to clean up now. If people can’t or don’t want to follow me, we have to replace them and find people who can. Because at some point [the issue] wasn’t existential but it was very, very crucial. (MachineCo, CEO, Interview 1)At that time, I had already matured regarding this topic of dismissals. And I didn’t feel have a guilty conscience. . . . Because I also think those dismissals are necessary if you consistently pursue a strategy and if there are conflicts that cannot be resolved. Then it may be necessary to make such a personnel decision. (ConstructCo, CEO, Interview 2)
Separating	Distinguishing personal from business matters, without ignoring or undervaluing either side	That was also a learning experience for him [i.e., for the co-CEO]. To come to the decision that I have a good relationship with [the manager], but he still doesn’t fit into the team. . . . And then restructuring the responsibilities and sending people away and saying: You just don’t fit anymore. (DigitalCo, Senior Manager 2)Emotions are also part of it. But it [i.e., the separation interview] is a vulnerable situation, and I also don’t want to be intrusive. Because the moment you say you’re dismissing this person, you’re the enemy. . . . And then you’re not the one who comforts; you have the role of the one who says: it’s over. You don’t comfort your ex-girlfriend when you’ve broken up. You can, but it’s weird and it doesn’t lead to anything. (MachineCo, CEO, Interview 2)But you must steer clear of that completely. You really can’t look at it [through a purely emotional lens]. You really have to say: No, no, these [emotional and job-based issues] are two completely different issues. (StoreCo, CEO, Interview 2)
Reinterpreting	Reinterpreting the basis of the decision from mismatch to personal culpability	[The manager and I] clashed again and again because I demanded that we needed [another solution], which was impossible for him. . . . Yeah, being non-cooperative is the nicest way to put it. (MachineCo, CEO, Interview 2)But in this situation, with two years of no real measurable success, it almost doesn’t matter where it comes from. . . . Then you have to be consistent and say: we cannot afford to keep you anymore in the future. (ConstructCo, CEO, Interview 2)I realized [the manager] is trying to play with [me] now and it’s obvious that we’re not a team here. So he’s taking advantage of the [my personal] situation—that was when it was clear to me that our mutual trust was suffering badly. And that was the moment when I decided, okay, this [dismissal] is finally going to happen. (StoreCo, CEO, Interview 3)
Redefining	Rethinking the company-employee relationship as reciprocal and conditional one by shifting responsibility toward employees as well	You’re a very loyal and great employee with many skills, but in your current role, you can no longer contribute what you need to contribute to this organizational change that we’re facing. And so, we’ve hired someone else. . . . But it’s also up to you to accept that and move on. (DigitalCo, co-CEO #2, Interview 1)For instance, I require cost accounting, and I have several other needs that have kept me on hold with you for two years. And we are not getting anywhere. . . . I need someone to do these things for me because I’m unable to. If you cannot deliver these things properly, someone else must do it. (MachineCo, CEO, Interview 2)That you don’t dismiss employees as a family business. . . . I think that’s a very strange taboo. Why is that the case for family businesses? We are also a commercial enterprise. It’s just that we are a few family members who own the company or work in it. I find that a very, very strange and difficult stigma to deal with. Because at the end of the day, we also must do that [i.e., dismissals] in order to continually develop the company. (SupplyCo, CEO, Interview 1)
Rationalizing	Shifting the company-employee relationship so that dismissal decisions are based upon technical aspects	Because, in the end, I think it’s always cheaper to pay a severance package and get a clean end. I think the most expensive thing is to sit it out, like people will stay or leave or something. (MachineCo, CEO, Interview 1)The decision was not made overnight, but there were several coaching sessions in between. The employee on her own, and also together with me. The things were discussed and worked on in these coaching sessions. (StoreCo, CEO, Interview 2)That was one of [the HR manager’s] skills, simply boiling things down to the facts. And to say: By the way, assuming we were to invest €300,000, we would be rid of all our problems [regarding severance payments]. OK, that’s a figure. But then you know what you have. (MachineCo, CEO, Interview 2)
Revised Dyadic Sensemaking: Inner Certainty Based on Less Focus on Individuals	Revised dyadic sensemaking that changes hesitancy by focusing less on individuals	Then, after he [the predecessor] left, I was able to say [to the manager]: You are not doing what I need in this position. And we’ve been talking about this for 2-3 years now, so we have to part ways at this point. And then suddenly things started to fall into place. (MachineCo, CEO, Interview 2)And that, of course, also gave the project [of letting go certain managers] a lot of credibility, because I made it very, very clear that I was giving notice: If you don’t want to go along with the culture or you don’t want to go along with our vision, you can unfortunately no longer play on our playing field, so to speak. (StoreCo, CEO, Interview 1)And then somehow the experience came with doing it. And then I thought: Okay, I’ve been struggling for a long time to make a good decision. And I always said there’s no other way. But then I saw: Oh, there is another way. And we find replacements. And we really find solutions for how to move forward. And it’s not the end of the world if we dismiss somebody. (MachineCo, CEO, Interview 1)
Revised Prospective Sensemaking: Inner Certainty Based on Value-Alignment	Revised prospective sensemaking that changes hesitancy based on concerns related to organizational values into value alignment	But that really came with time and then also with further separations. As I said, we also made dismissals where the employees then saw: Okay, separation management is also possible in this way, i.e., at eye level and with respect. (DigitalCo, co-CEO #1, Interview 3)Of course, it also gave credibility to the management because I was very, very clear in firing people. . . . That had a very, very strong effect on people. (StoreCo, CEO, Interview 1)We now try to communicate very quickly and properly when we give someone notice and then really say: OK, there’s a personnel decision here . . . the department heads are then called together in the next hour or the next day at the latest, are allowed to ask questions, explanations are given about what we’re doing . . . it’s about us saying: this is the view of the management. (MachineCo, CEO, Interview 2)

OPEN IN VIEWER

Figure 1

A Sensemaking Model of Managerial Dismissal Decisions

Recognizing a Mismatch and Encountering Hesitancy to Dismiss Managers

Our findings show that sensemaking of managerial dismissals first began when the new CEOs perceived an existing or anticipated manager-firm mismatch. As is common, the new CEOs used their initial time in office to determine who would best support them in steering the company forward. Across all six cases, the new CEOs encountered at least one perceived manager-firm mismatch due to various reasons, including a lack of individual performance or adequate skills, or behavior of managers that is considered inappropriate; one new CEO described such mismatches:

For me, there are only two categories. One is a question of personal character and the way we work together. That is, does he or she fit into the team structure, and is the chemistry right, so to speak? And the other is performance. (ConstructCo, CEO, Interview 2)

The realization that dismissal considerations were part of their role came as a surprise to most new CEOs—for five of them, it had been the first CEO role, and the other two (StoreCo and ToolCo) had previously led smaller startups. The new CEO at StoreCo recalled that she had “honestly not seen [the situation of thinking about firing someone] coming. I hadn’t thought about it before” (StoreCo CEO, Interview 2). The realization of this mismatch triggered an initial sensemaking process among all new CEOs; this process encompassed both a dyadic sensemaking process focused on the new CEO’s personal and role-based perspective on the manager and a prospective sensemaking process focused on anticipated reactions by organizational members to a potential dismissal and its fit with organizational values.

Dyadic and Prospective Sensemaking in Revising Managerial Dismissal Decisions

As the mismatch persisted, the new CEOs deliberately searched for different perspectives to resolve the situation. In the interviews, the new CEOs shared the process of how they, despite their initial concerns, aimed to change their thinking about potential managerial dismissals. We identified five mechanisms that supported a revised sensemaking process, enabling CEOs to reconcile tensions and overcome their hesitancy to dismiss managers. These mechanisms included inflating what is at stake, separating personal from business matters, reinterpreting the decision’s basis, redefining the employer–employee relationship, and rationalizing how employees are dealt with. Our findings highlight that inflating, separating, and reinterpreting predominantly supported new CEOs to change the dyadic sensemaking, while redefining and rationalizing predominantly related to revised prospective sensemaking.

Revised Sensemaking and Managerial Dismissal Decisions

Our analysis reveals that all new CEOs underwent prolonged sensemaking processes, often lasting over a year, highlighting the deep-seated reluctance to dismiss managers. Underlying this revised sensemaking process were five mechanisms that supported new CEOs in overcoming their initial hesitancy. However, our analysis indicates that these mechanisms only result in revised evaluations when they combine mechanisms that target both dyadic and prospective sensemaking.

Understanding Managerial Dismissal Decisions Through a Sensemaking Perspective

While extant research presents managerial dismissals as a relatively rational and straightforward cost–benefit decision in which CEOs analyze whether a dismissal is beneficial or detrimental for the firm (Bilgili et al., 2017; Georgakakis & Buyl, 2020), we portray dismissal decisions as an outcome of a prolonged sensemaking process. Our study thus carries relevant implications for how researchers understand managerial dismissal decisions. First, our study shows that CEOs do not only take “facts” and “costs” into account. Instead, they reflect extensively about values and dyadic relations to the managers in question, encompassing both role-related considerations as well as deeply personal considerations. Over the past years, an increasing number of studies have highlighted the importance of personal stakes and potential moral obligations when CEOs take dismissal decisions (Hiekkataipale & Lämsä, 2017; Keum & Meier, 2024; Rivera, 2020). While Keum and Meier (2024) provide large-scale empirical evidence that “moral costs” affect decision-makers’ dismissal decisions, our study zooms in on the black box of the decision-making process. It explains how precisely new CEOs take personal considerations and moral costs into account—and how they can overcome them in revised sensemaking. These insights provide new impetus for research on managerial dismissals by shifting from an antecedent-based perspective on dismissals (Andrus et al., 2019; Boeker, 1992) toward a processual understanding of how and under which conditions CEOs in value-based organizations actually “pull the trigger” and decide on often unpopular dismissals. Our findings also show how hesitancy to dismiss is often rooted in interpersonal relations, encouraging future research to pay more attention to relational dynamics among the upper echelon (Ingram & Zou, 2008). So far, extant research has related friendship ties among managers mostly to positive individual and firm outcomes, such as friendships helping to manage resource dependence among firms (Westphal, Boivie, & Ming Chng, 2006), or allowing executives to gain higher bonus payments (Rose, Rose, Norman, & Mazza, 2014). Our findings shift the focus to dilemmas that emerge from such relations. While Boeker (1992) proposes that managers directly reporting to the CEO are likely scapegoats in times of poor firm performance (thereby neglecting potential friendship-based relations), our findings indicate that, particularly for such close managers, CEOs might find dismissal decisions challenging—even if such dismissal would be beneficial for the firm. In sum, our findings aim to shift the focus of managerial dismissal research from rational, cost-based analyses to a complex process that includes value-based and relational considerations.

Further, our findings highlight the role of organizational members and prevailing organizational values for managerial dismissal decisions. Thus, our study challenges prior research that has mostly depicted dismissals as localized events that solely affect the dismissed individual (Boeker, 1992; Haleblian & Rajagopalan, 2006). Our findings add to the research on dismissals as signals (Bartunek et al., 2008; Krackhardt & Porter, 1985) by showing how CEOs extensively make prospective sense to anticipate how organizational members likely react to managerial dismissal decisions in light of the existing organizational values. Our findings demonstrate that the CEOs are well aware of the signals they might send to the organization. Particularly in value-based organizations, dismissals might indicate a shift toward more formalized employee relations (Coyle-Shapiro & Shore, 2007), provide an updated indication for organizational members of which behaviors are expected (Wrzesniewski et al., 2003), or indicate a shift in leadership style from predecessor to new CEO (Ma et al., 2015; Mitchell, Hart, Valcea, & Townsend, 2009). Thus, dismissals might be perceived as disruptive events (Laulié & Morgeson, 2021; Simón et al., 2023) that can create intra-organizational shocks, which may lead to further turnover among managers and employees (Andrus et al., 2019), or, alternatively, might serve as a starting point for desired culture change in an organization (Andrus et al., 2025). These insights provide ample opportunities for future research into how CEOs use dismissals as a strategic tool and under which conditions employees understand dismissals as conducive or disruptive. Such questions are particularly relevant when investigating fraught processes such as strategic change, restructurings, or cultural shifts (Belling et al., 2022; Li, Chen, & Shen, 2024; Weiser, 2021). Future research could investigate how the context (e.g., timing, communication, existing organizational value set, etc.) affects organization members’ interpretation of dismissals, and how CEOs strategically choose when and whom to dismiss to facilitate change.

Second, our study provides insights into dismissals during new CEOs’ early tenures. For new CEOs, the initial period is often difficult (Andrus et al., 2025) as they need to understand the organization as well as the existing team (Denis et al., 2000; Ma et al., 2015; Wang et al., 2023). Past research on dismissals in post-succession contexts has demonstrated that new CEOs face various structural obstacles when changing the management team (Georgakakis & Buyl, 2020; Ma & Seidl, 2018), such as a lack of board support or predecessor influence that new CEOs find hard to overcome without a strong power base (Boeker, 1992; Querbach, Bird, Kraft, & Kammerlander, 2020). The case of new family CEOs presents an intriguing setup, as they face only few formal obstacles due to the overlap of management and ownership, which grants them de facto power to engage in dismissals. Our study highlights that even if structural obstacles are largely absent and new CEOs possess near-complete discretion, they “are . . . constrained in their ability” to dismiss managers (Ma & Seidl, 2018: 608). By building theory on how personal concerns and concerns related to organizational values affect the early post-succession experience of CEOs, we provide novel insights into how new CEOs learn to deal with difficult decisions. We encourage future research to pay particular attention to such “informal” constraints and study when and how they emerge—and how they might affect various decisions taken by new CEOs. Moreover, our insights on the importance of revised prospective sensemaking invite future research to study how new CEOs craft scenarios about their organization during their initial tenure. How, for instance, do new CEOs craft futures that align the considerations of different stakeholders and the existing organizational values? How do close allies and opponents influence this sensemaking process? Such insights might create a new understanding of why some new CEOs manage to change their organizations while others find it impossible to do so (Li et al., 2024; Weiser, 2021).

Making Sense of Dismissals in Family Firms and Other Value-Based Organizations

Our study also extends insights into how family CEOs address non-financial concerns in dismissal decisions, thus adding to research on employment practices in family firms (Gómez-Mejía et al., 2024; Lefebvre, 2024; Neubaum, 2018; Tsao et al., 2021) and drawing out implications for other value-based organizations.

In the past, research has shown that family firms tend to execute fewer dismissals than non-family firms and explained this finding with the importance of non-financial considerations, such as strong interpersonal ties or focus on employee wellbeing that impede dismissals (Belling et al., 2022; Gottschalck et al., 2020; Lefebvre, 2024). However, researchers have, to date, been unable to explain why and under which conditions some family CEOs are ultimately able to overcome their initial hesitancy and engage in dismissals (Block, 2010; Keum & Meier, 2024; Lefebvre, 2024). Our research provides much-needed insights into this heterogeneity, showing that the family firm–related constraints do not necessarily paralyze the family CEOs, as predicted previously (Rondi et al., 2022; Tsao et al., 2021). In a few rather extreme situations (related to e.g., theft, discrimination, etc.), family CEOs in our sample immediately manage to overcome constraints and dismiss the manager as they perceive that “basic principles” have been breached. Otherwise, the family CEOs engage in prolonged sensemaking processes and actively search for ways to overcome their initial hesitancy to dismiss. While all CEOs in our sample initially experience personal concerns and concerns related to organizational values, our analysis shows differences among family CEOs in how well they can engage in the mechanisms to revise their sensemaking. In some cases, despite lengthy deliberations, the family CEOs ultimately reject dismissals. In particular, the new CEOs of two case firms were unable to “de-personalize” dismissal considerations and hence continued to feel constrained by personal concerns. In both cases, while ownership and leadership were transferred from parents to children as is common in intra-family successions, the new CEOs had experienced some succession turmoil (i.e., death; career instability). This observation has important implications for further research on family firm successors’ decision-making, as it shows that specific succession conditions, which go beyond the variables typically captured in succession studies (such as education or prior work experience; de Massis et al, 2008), might influence the successors’ decision-making behavior.

For most cases, however, our model shows that the family CEOs can ultimately find ways to overcome the perceived dilemma and align dismissal justifications with the existing value set. Engagement in the five identified mechanisms (inflating, separating, reinterpreting, redefining, and rationalizing) allows them to “normalize” dismissal decisions; that is, they start to see them as an unpleasant yet necessary task in their role as CEO. The mechanisms allow the family CEOs to shift the focus of their sensemaking away from the individual person, centering on the organization and its future instead. This finding is relevant for research on family firm dismissals as it emphasizes the necessity to treat dismissal decisions as malleable and dynamic processes rather than static events. Given the observed variance in our sample, our research raises important questions around how, for instance, advisors (Strike & Rerup, 2016) or non-family executives might support family CEOs in revising their sense about contentious issues (Diaz-Moriana et al., 2024; Salvato et al., 2010).

The context of family firms represents a case in which values are particularly salient and relevant to organizational decision-making (Astrachan et al., 2020; Gómez-Mejía et al., 2007). As such, it provides implications and potentially transferable insights into other value-based organizations that are similarly characterized by strong relational foundations, stable careers, and pervasive non-financial concerns (Bacq et al., 2019; Denis et al., 2000). Similar to family firms, in social ventures, cooperatives, universities, sports clubs, or hospitals, financial and non-financial considerations commonly clash during decision-making (Denis et al., 2000; Dowling et al., 2014), and CEOs in these organizations often need to find ways to align their decisions with seemingly clashing organizational values (Bacq et al., 2019; Mitchell et al., 2009). Our findings provide insights into the mechanisms through which CEOs can reframe personal and organizational value-based concerns, allowing them to engage in action. We encourage future research to investigate more deeply the origins of such organizational values and how they necessitate potentially diverging responses from new CEOs. For instance, would CEOs in hospital settings, characterized by strong patient-case-oriented values (Blatt et al., 2006; Denis et al., 2000), engage in similar forms of sensemaking around contentious decisions as a social entrepreneur (Bacq et al., 2019) or, in our case, a family CEO? Our findings thus provide an invitation to investigate how various types of non-financial goals affect sensemaking and, ultimately, the decision-making of new CEOs.

Last, our findings open interesting questions regarding how value-based organizations deal with high moral costs of dismissals (Keum & Meier, 2024), particularly when considering the implications of retaining unwanted managers to “keep the peace.” At ToolCo, the new CEO did not fire but degrade a manager to a lower position as a way to avoid the moral costs of dismissals. We believe it is worthwhile investigating such alternative paths for value-based organizations to circumvent moral costs and their consequences. For instance, organizational members, particularly new CEOs, might engage in ostracizing unwanted managers (Dash, Ranjan, Bhardwaj, & Rastogi, 2024) whom they cannot directly dismiss, thus bullying them out of the organization. Such paths might be even more “immoral,” yet are also less visible, and provide new insights into how value-based organizations and their CEOs deal with tensions both openly and hidden.

Practical Implications

Our findings also have practical implications for decision-makers in family firms, as well as potentially other value-based organizations. Decision-makers should be aware of the firm-specific constraints that make it challenging to dismiss employees, especially deeply embedded managers (Keum & Meier, 2024; Tsao et al., 2021). Prevailing values, personal constraints, perceived taboos, as well as concerns relating to the managers’ embeddedness in the organization are specifically powerful—in particular, when it comes to removing a “loveable fool,” that is, someone who culturally fits but has become operationally obsolete (Casciaro & Lobo, 2005). Our findings provide evidence of how such constraints can be overcome in a revised sensemaking process. Such insights are vital for new CEOs who run with the mandate to prepare their firms for the future and, hence, need to make changes to their managerial team. Our insights encourage such new CEOs to understand the organizational culture early on, to find “allies” within the organization that support their sensemaking, and to assess the existing organizational values critically.

Limitations and Future Research Directions

Despite our study’s contributions, our research has limitations that provide future research opportunities. First, we chose an extreme context, that is, family firms. In these value-based organizations, the family CEO’s non-financial goals and the specific organizational culture pose important constraints that impede dismissals of managers. While some of these constraints are similar to those emerging in other value-based organizations, others stem from the overlap of the family and business system and, hence, might be idiosyncratic to the family firm context. As such, we encourage future research to study sensemaking of managerial dismissals in other value-based organizations to scrutinize the transferability of our findings to other organizational forms. Moreover, our findings rely on high CEO power. In cases of less powerful CEOs leading value-based organizations, further processes, such as negotiations, political maneuvering, or power plays among managers, warrant further investigation (Boeker, 1992; Ma & Seidl, 2018).

Second, our study focuses on dismissals in Germany. Again, these are rather extreme cases, because keeping employees, especially long-term ones, lies at the core of German businesses (Berlemann, Jahn, & Lehmann, 2022). In other countries, however, dismissals may not be perceived as such a profound dilemma by new CEOs. Future research could investigate dismissals in other geographic and cultural contexts (Bornhausen, 2022) and, in particular, pay attention to their potential (mis-)alignment with prevalent organizational values. Relatedly, our study specifically targeted new CEOs’ sensemaking of dismissals, assuming that they (a) are in particular need to adapt the managerial team to achieve their goals and (b) face particular challenges due to the difficulty of predicting the organization’s reaction to potential dismissal decisions. In future research, it would be interesting to learn how sensemaking is similar or differs for CEOs with varying levels of age and tenure. Moreover, while we could not identify any differences in whether the new CEO had previously worked in the family firm before assuming the CEO role, we still encourage future research to scrutinize the specific succession conditions and their influence on new CEOs’ hesitance to engage in dismissals and their ability to revise their sensemaking. In particular, our analysis reveals that two new CEOs whose succession was characterized by turmoil were unable to normalize dismissal decisions. Such cases deserve further investigation.

Third, we focus on targeted dismissals of deeply embedded managers and excluded, for instance, mass layoffs through downsizing (e.g., for performance enhancement or due to distress), as such targeted dismissals may present new CEOs with a stronger dilemma situation (Hiekkataipale & Lämsä, 2017; Keum & Meier, 2024). Future research could, however, build on our findings and study how (new) CEOs deal with mass layoffs. Are the mechanisms similar, weakened, or pronounced in their expression, or are there even different mechanisms at play?

Last, while our qualitative approach provides rich insights into the sensemaking processes of new CEOs, it cannot rule out alternative explanations for how the process is understood. Hence, we encourage an in-depth study of further perspectives, such as those of the dismissed or those of other long-term involved stakeholders (e.g., predecessors, business partners, organizational members), which might lead to alternative, insightful explanations. Here, alternative methodologies might further shed light on this situation, and we encourage future research to be creative in utilizing new approaches, such as ethnographic work or configurational approaches (Ashforth & Reingen, 2014; Waldkirch, Kammerlander, & Wiedeler, 2021).